The State of China, with Qing Wang, Zichen Wang, and Adam Tooze
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From Asia Society Switzerland, this is State of Asia. I'm Remco Thames.

China is undergoing unprecedented changes, both in its economic growth model, as well as, for example, in the rise of pragmatism among younger generations, who are no longer driven by aspirations to become billionaires in Shanghai, but seem perfectly happy to settle for a less stressful existence in Kunming, Zhengzhou or other second and third tier cities. And then there are the looming tariffs, which incoming US President Donald Trump promised to impose.

We discussed the state of China, touching all these points and many more, at our third State of Asia conference, which we hosted last November in Zurich.

I'm happy to bring you that conversation here on the podcast today. You'll hear from Tzu-Chen Wang, research fellow at the Center for China and Globalization, a non-governmental think tank in Beijing. From Adam Tooze, economic historian and professor at Columbia University in New York. And from Ching Wong, host of the immensely popular Chinese language podcast The Weirdo, where global Chinese discuss everything from geopolitics to shared anxieties. Things that seem to be joined at the hip nowadays.

The discussion is moderated by Finbar Birmingham, the Europe correspondent for Hong Kong newspaper South China Morning Post. We want to talk about narratives in this session. And I want to lead with some of the narratives that we hear about how China views the US election. I mean, speaking to my colleagues at SCMP in advance of things today,

The consensus was, when I spoke to them, that China wants Trump. That was broadly what I heard from my colleagues, because whereas he will bring chaos and unpredictability, perhaps the Chinese can hold their nose for four years and batten down the hatches in the hope that he will burn bridges with the US's allies, that maybe the US will be in a less powerful, less...

Structured it'll just be in worse state by the time he leads office leaves office So I want to first of all ask the chin. I mean, I know this is a China's not monolithic There are many views in in Beijing and among government officials Can you explain perhaps how this argument is seen among the policymakers that that you know, and what are the dividing lines? I?

Well, thanks for the question. It's a really big one, and I think the election is over, and we now have a president-elect who everyone knows is quite unpredictable. I'm not sure there is a consensus in China's policy community on who China prefers to be the next president of the United States.

And I'm actually not very convinced that China would prefer Donald Trump because he would wreak havoc or create a lot of instability or chaos within the US or among its allies. I think that view is fundamentally rooted in the understanding that

China-U.S. relations is a zero-sum game. And I don't think China believes that the U.S. becomes weaker than China benefits, because I think China benefits from stability, from peace, from a mutually beneficial relationship with not just the United States, but also the rest of the world. And Donald Trump is

Simply unpredictable, and nobody knows. I'm sorry, but maybe we will have to get up in the morning and check out X, formerly Twitter, and see what he tweeted out at 5 a.m. just now. And we're going to repeat that sort of history. But on the other hand, I think Donald Trump is...

He's not very ideological. You can describe it in a way of pragmatism. And, for example, the current Joe Biden administration has put 100% tariffs on Chinese EV exports to the United States, and I think there are rules at Commerce Department which basically bans any Chinese EVs. But President-elect Trump has said that he would welcome Chinese EV investments in the U.S.,

which would contribute to the local economy, to job creation. And his very close partner, Elon Musk, basically turned around the company with his Gigafactory in Shanghai. And Shanghai's Gigafactory is like the turning point for Tesla. And Elon Musk has visited China quite a few times. He has met senior Chinese leadership.

and his mother visited China, so I think that's, you know, what we are going to have is a very interesting four years ahead, but also I think, you know, China would want, you know, President Xi Jinping sent a congratulatory message

just a few hours ago, where I think the Chinese leader laid out his vision for China-US relations, which he hopes, and China is quite consistent in that aspect, that they want a mutually beneficial, consistent, constructive relationship. You know, when Donald Trump was in office, the first time before he took office, he took a phone call from then Taiwanese leader,

And that was quite a surprise. I think, you know, the Taiwan issue is the fundamental, you know, the Chinese political foundation of China-U.S. relations. So Beijing would hope that, you know, he would no longer send any wrong signals on this issue, which would be of paramount significance. Yeah.

Well, the Musk issue is the wild card. I agree with you. I mean, I've seen a few stories over the last few days about Musk's very close economic relationship with China is sort of what policymakers in Beijing will be looking at as perhaps some leverage. Jing, can I turn to you and ask you about how Chinese society, how do your listeners view this situation? I mean, is there any sort of preference or, I mean, you know,

Trump, I mean, in Hong Kong, for example, you know, you see these opinion polls and Trump was actually far more popular than the Biden or Harris administration. And that's a legacy thing from the sort of era in which I think Hong Kongers thought that that Trump would stand up to the to the Chinese state more than than the Democrats. But on mainland China, how do you how do you see that issue?

yeah, maybe two points. Uh, one is to add to, uh, to Chen's point. I think this is not a zero-sum game. And from what I have observed from the Chinese social media platform and also the interactions I have with my audiences through the podcasting, I think, surprisingly, um,

there is a sense of indifference towards this U.S. election compared to the previous one. So I've covered international affairs for Chinese audiences for the last 10 years, including the one in 2016 and 2020, and I felt this round election, the general enthusiasm from the Chinese public to talk about this election is sort of a plan in a way,

Sure, there are discussions. It's important in national news. But I think the mentality of the general Chinese public since 2020, there was a sense of disappointment because around that time, there was the hope that Biden administration would pursue a different approach, a different China approach compared to Trump. But I think the...

then it turns out to be a sort of continuity or even expansion of what was already there. So then it became for Chinese public, if you look at it from the bilateral relationship perspective, there is no preferred scenario for China, particularly because China

I think you wouldn't say none of them are China's friends and no enemies. So it doesn't matter. It's sort of apathy. One more point I want to add, which is from the gender perspective. And of course, like China is a large country, so we get different...

perspective, different group. And I think for the type of audiences I am dealing with, I think there is a deep disappointment in terms of how this, you know, reflect, reveals what kind of gender politics

It's right now in the U.S. And I think it's a tragic day for women's rights. It's a tragic day for American women, but also for women around the whole world. And Trump is a figure with a well-documented history of misogynism and even sex crimes. And I think that's really hard to process for a lot of my listeners who are

mostly young women in China who are the Chinese version of Charlie's Cat Lady. And so I see this result of American election is a crisis of global masculinity and it's a global gender crisis. It's not just about China, US. It's about a global calculation that has been wanting to make some changes, but

this is definitely an upsetting moment for women across the world. For sure. Adam, look, this is about China, but I have to ask you about Europe here. German government on the brink of collapse. Just this morning, in fact, I saw the EU correspondent for Der Spiegel saying that the leader of the free world is now Ursula von der Leyen. So what a time to be alive.

I want to ask you about where Europe fits in here. Are we sort of adrift in the middle of, you know, Trump on one side who hates Europe, who hates the EU, perhaps is a more accurate way of describing it, and China with which ties are incredibly testy. Europe, the EU is...

I think leadership wise, there's no real sort of inspiring figures on the horizon. Where do we stand? Is this just disaster for Europe? We will get back to China really quickly. So I'm going to make this super brief. I agree we have to speak to it. But

But I want to get back to the points my co-panelists made as quickly as possible. I mean, I don't think there's no coincidence about the fall of the German government. I mean, you can even call it fall is, I think, misappropriate. This is a controlled demolition. This is a building that needs to come down. They've been waiting months to find the right opportunity. They needed something that was significant enough to make this look less trivial.

Than in some senses it is and the Trump election provides that occasion I actually do think if one was regarding this from the position of European statecraft. We need a solid government in Berlin Yeah, we don't have it currently the sooner they get to the Kenya coalition of the three big forces in modern German politics Which are not the Liberals but the Christian Democrats the SPD and the Greens the better because that actually provides a platform and

I was just really struck actually I wanted to come back to this gender crisis point like I think Ching's analysis is spot-on for the United States and China and there are some sort of mirror images of each other and I think it's a really powerful analytic as She was saying that and you then asked me about yeah, but wonder whether it really does bite in quite the same way in Europe and

And I think then the answer is when you pause over it and linger over it, it does to a degree, right? And the AFD, if you look at the profile of its voting, or if you look at the profile of the voting for whatever Farage's party is now called in the UK, Reform UK, or you look at the voting of the far right in France...

I think it confirms Ching's thesis that there is a... Because all of those show a predominance of young men. If you look at South Korea's political profile, you see the same phenomenon there with a very marked difference between young Korean women and young Korean men. Men are female leaders in the European far right. Yes, exactly. And so it's this weird... I think this is a really fundamentally important analytic through which to view this.

very strong shift for Latino men in the United States. So it's generally some cross-hatching of gender with class and then maybe in the American case ethnicity or race that produces this extraordinarily powerful effect and it's

Certainly when I was speaking to you, I'll just end with this anecdote. I had a series of meetings with Central Committee member in Beijing in the summer, a long, protracted conversation. And he was quizzing me about Trump and how to read it. And I was like struggling to think what a Central Committee... He has a staff that tells him everything he needs to know. But when I said...

The single most decisive difference on this is gender all of his staff went. Oh my god What an interesting question we not thought about and he literally staffed so Central Committee top 204 people in the Chinese leadership. He's he he he Dedicated this question to a bunch of his staffers to go away and analyze it because I don't think they'd even thought about it So I think it's a really central question to organize our thinking around. Yeah, very interesting is it Jen look

Alicia was talking this morning on their discussion about how perhaps events in America will have overtaken slightly discussions in Beijing about stimulus and what do they do here. So let's pivot a little bit to that. Do you agree with that? And can you explain from your very much in-the-weeds perspective of how the sausage is made in China? Sure.

From the outside, it looks as though this has been very slow. Why are they not moving more quickly? And again, it feeds into this narrative that we perhaps have as Westerners or outsiders that Xi Jinping can flip a switch and all of a sudden the stimulus flows. Yeah.

I was here when Alicia was on stage, and she's a very good friend. I'm very privileged to have gone on to her podcast. Yeah, she mentioned, for example, there is an ongoing standing committee session of the National People's Congress where the Chinese government is basically saying,

adding to the central government deficit by unspecified amount of trillions of yuan of fiscal deficit. So the idea is for the central government to raise money through the new national debt and swap them with local government debt because basically the local government debt

cannot pay for its debt any longer. I think the stimulus effect from this debt swap by the central government from incurring more debt is that, perhaps contrary to popular perception,

China is led by the Communist Party of China. It is highly unitary, centralized state. But in terms of fiscal spending, it is very, very decentralized. Local government spending account for something between 83% or 85% of the overall government spending in China. Because the local government have been running short of money,

So the fiscal expenditure in China has been very low for this year and the year before last. So the net effect of basically for the central government to raise money and give them to the local government is a form of fiscal stimulus in China. And the reason for that is, of course, the local governments have a lot of spending responsibilities

And in the past, they relied on the sales of land to the real estate developers. That's like a very big revenue for them. But the real estate is not selling and the prices have been falling. So that's

put the local government finances on a very, very different level. I think coming back to the question with regard to China's domestic economic policy and its relations with the United States and the rest of the world, I think it's sometimes perceived that Chinese domestic policies are aimed for

elevating China to a bigger stage, to a higher role internationally, to rival, if not to displace or replace the United States. That's more or less, I think, in many people's minds. But I think the fact or the Chinese perception is the other way around. The foreign policies, the external policies are first and foremost aimed at facilitating a

conducive environment for domestic development because it is a huge country, 1.4 billion people, and as Alicia said, its GDP per capita is 13,000 US dollars, which is very low. It's lower than Bulgaria, I think the lowest in the EU member states. So China still has a lot to do domestically. I mean, if you observe Chinese diplomacy, its relations with various countries,

For the past year or two, you come to see, for example, the Chinese troops and the Indian troops disengaged on the border very recently. The ties between China and Australia is now better than it was two or three years ago. There is no additional tariffs by China on Australian goods. The British foreign ministry, foreign secretary was recently in China.

China seems to turn a corner with Japan, and China tries, although it is definitely unhappy with all the export controls, but it tries itself to maintain the China-U.S. relations on a stabilized track, although we don't know what would happen now that the White House has a new host at its house. So I think the

The Chinese is trying to stabilize its external environment to provide a better environment for its domestic economic development. Trump-proofing with Chinese characteristics. Adam, you wanted to come in on a point there. Yeah, it's...

Three really quick points. First of all, to get in the weeds with Zisheng, you've got to read his blog, Pekingology. It's absolutely essential reading. Indispensable source. Translation of the running commentary and debate within the Chinese elite. Indispensable. Second point is that to pick up on the point Zisheng was making about local government. When we say local government in China, the units are the size of large European nation states because it's 1.4 billion people. So to me, the most powerful and useful analogy here is the EU analogy.

When we're talking about fiscal policy rebalancing between local and central government, we're talking about something as protean and undecided as the fiscal compact within the EU. And this goes to the bigger point that Professor Lam at Fudan makes very powerfully, that China's recent economic growth, as much as anything, is about making the Chinese national economy as a coherent unit.

You start with China in the 80s. It wasn't just poor. It was incredibly regionalized, right? Because it had very little infrastructure, very little connection. It's 1.4 billion poor people in a society that's not tightly integrated. The growth of the last 30 to 40 years is about making the Chinese nation in a material way. And

And part of that is finding a fiscal structure that works. These are questions that go back in Chinese republicans and then to the 1920s when the federal option was very much on the table. And this question is now coming to the fore in a very dramatic way. And it's as open-ended and protein and creative as that. And there's quite a lot of scope there for dealing with balance sheet issues as there is in the EU.

And the challenge they have to address is no less historic in its significance. And though it's useful to apply a macroeconomic lens which says China had a credit boom and a real estate boom and now the bubble has burst,

It's an absurd understatement of what actually happened, which is that 500 million people were urbanized and several hundred million people were moved within China's cities. They're not pricking a real estate bubble. They're totally shifting gear at the mid-phase of national development from a heavy industrial and construction-led economy.

growth model to a new phase. In other words, we ain't seen nothing yet. We don't know what China looks like when it transitions from that infrastructure-led growth to manufacturing-led growth. And so in both these ways, it seems to me we need to sort of escape the

the superficially illuminating and analytic that macroeconomics provides and actually think more seriously about the scale of the institutional change that's going on in this huge complex. If I may add a point, Adam also mentioned this manufacturing-led growth, and this is something Alicia also touched on.

I came across a quote by Bob Lighthizer, who probably gets another senior position. He said in an interview with The Wild China a year back, there was a quote, no country got great by consuming. They all got great by producing. And I think China believes that. And if you go back to Alexander Hamilton's report on manufacture,

That's like the Chinese playbook. It is intent to, you know, China is now a leading producer on EVs, on solar panels, on batteries. And I think...

You know, the Chinese leadership has determined that this is the path to stay on, to upgrade its manufacturing capacity. You know, when we grew up in China, I think this is something we were all taught at school. It's like China was churning out eight billion T-shirts a year.

in exchange for a Boeing 747 plane. And that's just in the Chinese mind, and China didn't like it. Now it is in the process of producing its own jetliner, which is-- I don't know, it may become a competitor with Airbus and Boeing in a few years.

And, yeah, I think China is indeed targeted at, you know, making most of manufacturing and, you know, yeah. Yeah, I want to bring Jing in here, and we will get back to manufacturing. There's a lot I want to talk about on industrial to manufacturing and so on, but consumption is where I want to go with you, Jing. And, you know, can you talk to, is it a struggle? We look at it from the outside and they say China can't,

increase or isn't increasing consumption. People aren't spending more money. Is it that this is a struggle or is it a political decision? They're not struggling, they just don't want to. And can you talk from the perspective of the regular folks in China? I mean, what's the mindset there? Why aren't they, you know, when we look at it with our Western tinted spectacles, we're thinking, why aren't they spending more money?

sorry, I can only speak from my own experience and observation. I think it is not like Chinese ordinary people don't spend money anymore. It is...

They want to spend money in a smarter way compared to before, in a more rational way. You know, I spent the last 10 years in Europe, and every time I return to China, I visit China, I'm always a little bit surprised or even overwhelmed by how people actually consume there. They have all sorts of, like, you know, social media platforms that enable you to spend more and more money, like live streaming, buying, like...

And it's like, it creates a huge growth number for the economy. But I think there was also a lot of irrational thinking or behavior. For instance, my mom was one of the quote unquote "victim" because she was a big, big

open bite a lot of things she doesn't really need. And so I think right now with this, one, the economic downturn, and second, this economic policy from the government, and also I think there is a

traditional thinking from the Chinese side is like, oh, when I see it is probably going to, like in the coming period, we're probably going to experience an economic downturn, then we want to plan from now. And for instance, some of my friends and listeners that decide to

have the consumption downgrade. So, which is, for instance, if you live in Beijing or Shanghai, you first see an apartment there and if you manage to sell the property and move to cities like Chengdu or

and, uh, which are now becoming like really hotspot for young Chinese people to have an, you know, alternative, uh, like kind of a slowing down or even degrowth type of lifestyle is also getting popular. So I think, um, right now with this, uh, we, we, with the current dynamic, I think it's also a good opportunity for, uh, Chinese ordinary people to think about, not just, you know, to, uh,

spend to buy more but also to do it in a more smart, rational and well thought way. It's a bit like the slow movement after the GFC. And look again on narratives here is sort of the overarching theme of the discussion. Can I ask

Maybe Adam and Zichen or Jing, if you want to come in on this as well, what do you think of the sort of argument or the narrative that we hear that the Chinese Communist Party distrusts consumption as a lever, that it does give too much power to the people? I mean, how does that fit with the historical implications of that and what you see from the current state of governance in China? Yeah, it's really been an emerging theme. Zichen should say much more about this than me, but

From the outside looking in at the data, what you see is a hard-faced version of common prosperity. It's a tough love kind of regime management. Like phrase you just can't imagine being uttered in Western politics.

Though during the Eurozone crisis, I guess there were aspects of this. If you were in Greece or Italy or Portugal or Spain or Ireland, exactly, you felt you were very much on the end of that kind of structural adjustment kind of strategy. To someone with a Western growth-orientated Keynesian mindset, of course, it's profoundly frustrating that this should be the logic. But it goes hand in hand in China, unlike in Europe, with a huge emphasis on investment. So it isn't lower demand overall, but it's focused on investment.

growth orientated investment rather than immediate consumption But it does seem to me a slightly undigested looking at the history of the Chinese welfare state It's an undigested legacy I think of the reform period right where you move from a corporate based work production unit based welfare model That was wholly comprehensive iron rice bowl that kind of model to the fracturing of that model in the 90s and the 2000s and the early efforts to build a national social insurance type system

which has lagged behind, I think, the modest but nevertheless highly significant affluence that China has now obtained. And one way of describing it is there needs to be a catch-up on the social insurance, public health insurance side to raise provision levels to levels more adequate to the demands of an aging but also increasing the affluent society. And I think that would be the way maybe of historicizing this weird gap

It's also presumably intergenerational with the older generation remembering the really hard times, the middle generations being the profiteers of the boom, and the younger generation running into the slow growth and the unaffordability of housing. So you have like three generations overlapping in a model which right now isn't responding to people's needs in the way it needs to. But Sishen will have a much clearer idea of policy decisions. Before I call you to Sishen, I want to bring Ting on that point.

last point that you made, the generational differences and perhaps the movements that we saw evolve over the last number of years. My colleagues wrote about this all the time. I loved the coverage of involution and laying flat and so on. I mean, is that still very much du jour in China among a certain generation of people, this sort of frustration with the 996, with the lack of opportunities, with the lack of employment opportunities?

for recent graduates. Can you talk to that a little bit? Yeah, I think it's definitely a phenomenon in the last few years, I think ever since maybe the pandemic. And I think it has an up moment and down moment. And so for young graduates nowadays, if you ask them, what's your dream? If this will be like, for instance, 10, 15 years ago, I think a lot of people will say, oh, my dream is to become the next Jack Ma.

or the next Zhang Yiming and to, you know, through your personal hard work and effort and to achieve some sort of China dream to upgrade the social class and to do great things to make change. But I think nowadays people are being...

People are being much more pragmatic and realistic. And I see this laying flat and this 996 working culture as a way of resistance from a young generation of Chinese people.

But I think we should also differentiate the discussion that is going on on the internet and what people are really doing in real life. So on the one hand... It's not just a Chinese problem. Yeah, it's a universal problem. It's a social media problem. And so by creating that label of lying flat, it feels like you create some sort of solidarity with people who are also...

Yeah.

Yeah, you need a lot of infrastructure to be able to do so. Seeing it much easier, but being able to do it is a different story. And I will say the Chinese way of lying flat, the Chinese version of lying flat, is still quite...

hard-working It's a hard day's work here. It's different from European lying flat. European lying flat is the real deal. Qing has a very good podcast where you know millions of people listen to it and she also has I think seven figure followers on the Chinese version of Twitter and so she takes the pause of

of what the young middle class Chinese people are thinking quite accurately. And I think Adam really summed it up very well from a historic point of view. He's one of the best historians. And I just want to add the transition from the work production unit to a national centralized social insurance model that is practiced in the European Union

If you really look at it, the history in China on that is still very, very brief compared to what you have got here in Switzerland and on the European continent. This sort of thing takes time. And China is still a relatively poor country by GDP per capita. And I mean, it has already got basically a sort of universal health care, whereas our

I really can't figure it out why Bernie Sanders' proposal for universal healthcare in the United States is a radical idea. I just can't get my head around it. - Every European in the room is sort of nodding their head. - In China, there is still, the foundation has been laid, but it takes time and the level of protection that is afforded to the Chinese citizens

It's not sufficient. So in this ongoing policy debate, I'm sure you have read that this advisor, that former vice minister wants to say we should give two trillion yuan more to the medical insurance or to the pension fund. And this is an ongoing debate. And with all these proposals out there, I'm sure basically strengthening the social safety net

is actually well beyond the agenda. If not this year, maybe in the near future. And on the other hand, there is indeed this cultural thinking in China where you need to eat your bitterness because a lot of people, I think people at the leadership age, when they were little, they suffered a lot and they thought,

We got to where we are today by eating bitterness. So it's sort of spirit that the young people should live with. I mean, like it or not, that's the thinking in their head. And also, there is this, what I believe to be a biased view of the social safety net policies practiced, especially in Northern Europe. In China, there is this narrative that

Sweden, Norway and Finland spoiled their citizens so they don't work anymore. And that's not true. Yeah, but I think that's a big stereotype now in China. Yeah, it sounds like the Chinese version of the Monty Python sketch, the four Yorkshiremen. Adam, you wanted to really briefly come to that one.

600 million people in China live on very, very modest incomes still. That's the essential reality. If you're talking about national health, national social security, this is a society which in Shanghai exhibits global levels of wealth. But 600 plus million Chinese are out of absolute poverty and in the zone of very low incomes. And to manage a state like

of that scale with that baseline of its poverty, its real poverty in any meaningful sense of the word, is a huge, huge challenge. So it's a dualist system to an extent. So, Chen, I'm going to have to cut you off there because we've got 10 minutes and we have to solve the rest of China. Just one more minute. I think because there is this assumption that China is led by one political party, it is a unitary state, it's a very centralized leadership state,

So if you can convince one or very few number of people, then the whole country will fall in line. And why don't do this? Why don't do that? That's the sort of perception that people typically have. I'd say that is actually one way of othering China. Yes, it has a different political system than what is practiced here. But still, there are different ministries. They fight each other. There is a lot of bureaucracy here.

Basically, what you have in a Western political system, the sort of different responsibilities, different bureaucrats clash with each other, that also exists in the Chinese system. So I think this is also something people need to maybe take more into consideration, is

China is different, but it has more similarities than people realize. Yeah, very good point. Look, we'll move quickly on to a very quick topic, and that is industrial overcapacity. It should take about a minute. Look, Adam, you've been really among the leading critics of this Western push to push back against overcapacity. I mean, look, I was in Brussels this week. On Monday, I sat in on the Commissioner for Trade, I wouldn't say elected,

delegate, Maros Shevkovich, and he kept...

industrial overcapacity, overcapacity, overcapacity. There were some French MEPs asking him, would you consider coming up with an instrument specifically to deal with overcapacity? So it's not going anywhere. You see not just in the European Union, in the United States, also in emerging markets like Brazil, Turkey, India, also taking measures to counter what they claim to be the distortionary impact of subsidies and overcapacity.

Talk a little bit about why you refute that or why you disagree with the very concept of that. I don't want to go do a microeconomics lecture. We don't need to do that. I think there's a level of which it's absurd.

I mean, like, is there a global overcapacity of photovoltaics or batteries or cheap EVs? This is... Are we serious about climate transition or not? That's a simple answer. If you are, there's no such thing as an excess capacity of green energy. Full stop. It might be uncomfortable for us, but it's absurd.

There's an argument where it has a certain historical legitimacy, like the massive overbuild of heavy industry in China. Is there huge amounts of overhang of aluminium capacity in China? Yes, clearly there is. The same with steel. But then I would just go Zishan all the way along the line. The whole story that he's telling you is absolutely spot on. China doesn't export because it sets out to export steel.

It makes half of the world's steel capacity, discovers that in a bad year, Chinese uptake of that is not adequate, and then it dumps, or doesn't even dump. It finds more lucrative markets outside China for the steel it's produced than inside China. And hey, presto, it swamps whatever Western market it enters because China produces 10 times more steel than the United States. So the marginal variation in Chinese domestic demand for steel is a huge factor.

in the American bathtub, right? It's the whale in the bathtub of heavy industry right now. And why? Because of the local politics that Zishan's pointing to, right? This expansion towards massive capacity in China was as much as anything local government, which is, again, to emphasize the size of a European nation state racing another European nation-sized province for the most rapid GDP growth to attract the best workers to become the hub of global growth and meet your targets, right? Yeah.

And turning that around is the challenge of the moment for Beijing. And it's a huge political problem because they have lobbies, they have ministries that represent steel, coal, and whatever, and they need to be shifted within the party structure and realigned. So I see this as some of it is just really is bad lobbyism on the part of the West. Some of it reflects these overgrowth symptoms, but no one should ever imagine in the West that we're the principal target of this.

This is an overspill from a domestic growth story that is shifting gear. Yeah, so Zhechen, let me ask you about... So if you listen to... Anyone listening in the European Commission will be pulling out their hair about the lack of consumption and everything. But Zhechen, when Ursula von der Leyen talks about this, she quotes Xi Jinping and she concludes that China is making...

the rest of the world more dependent on China while becoming less dependent. China's becoming less dependent on the rest of the world. I think people are looking at dual circulation and so on. Can you explain a little bit about how Chinese policymakers and officialdom would receive what the likes of von der Leyen and other politicians in the West are saying? I mean, Adam, it sounds as though you would dispute that fact.

That statement rather from von der Leyen that it's intentionally manufacturing dependent phase the overcapacity is in the sectors the sector She's talking about the new sectors where there's actually right green tech, but then chips microelectronics The overcapacity argument is strongest in the sectors where my account fits best in other words steel aluminium They're not key to cheese growth strategy the dual circulation model and the key the new quality productive forces is all in the new tech space Yeah

which is where it's really hard to point to excess capacity. Because your argument is that we need more of this stuff in order to achieve our transition. Yeah. Do we have enough green energy capacity? But what do you say about local industry then, maybe if those jobs are being lost? Who's confusing the targets here?

Yeah, I give you all of a sudden want to make this about jobs. Well, then that's fine But you've just shifted the goalposts. Where is it? So is it the argument that nobody has clearly defined what success is or what they want to achieve? That would be one way of thinking about it and under the impact of Populism this is a part of the liberal I want to put like under the impact of populism the centrist best explanation is deindustrialization whoops China did it and

And so if you want to counter populism, you feel you need an industrial strategy and your best bet is green. And oh God, the Chinese are already there. Whoops. You know, that's the beauty of appearing at the same panel with Adam Toose. You can just leave all the answers to him. He has all the wonderful answers. You asked me. He took the words out of your mouth, right? I think one thing he says was very important. And I think sometimes it's exaggerated. China didn't set out to

hollow out to manufacturing capacities of other countries. It is not weaponized. It's not the domestic development of manufacturing capacity. It's not thought of as a weapon. It is an outflow out of the domestic situation. And I think a helpful way looking forward for the European Union and perhaps for the United States is

how to take advantage of China's manufacturing capacity. You know, there is now a great debate about, well, it's not a debate. The EU has already slapped the tariffs on Chinese EV exports, and Finba is the best source on that information.

And maybe try to create incentives for Chinese EV companies to set up shop in France, in Germany, in Spain, in the EU member states. China had this joint venture requirements back two decades ago. And I'm not sure EU could not take a page of playbook from the Chinese

to, you know, that would be a more peaceful and more mutually beneficial way of progressing forward. You know, Chinese technology, Chinese funds, Chinese human talent could be of use to Europe from that perspective. And as far as we can see now,

You know, China, basically, a lot of Chinese companies have gone abroad in the past few years. I mean, CATL set up a set of battery plants in Germany, and Chinese companies are going global. Crucially, Beijing didn't stop them. So Beijing is not against for the Chinese companies to move their production to across the globe. And I think that Europe should take advantage of that, maybe negotiate some favorable terms

for Europe instead of just imposing very antagonizing tariffs on Chinese EVs. Well, I mean...

I have a lot to say on that, but we don't have any time. But Jing, I want to give you the final word here. I mean, these Chinese companies are, say, if you're a Chinese consumer or a Chinese citizen and you see successful Chinese companies being harangued in the West, I mean, how does that translate online? I mean, do you see a lot of sort of national pride and people being insulted by how the West sort of describes these companies? I mean, what's the vibe in your community?

Yes, I think in terms of the perception of Chinese capital and company going global, I think there was also different faces. I think at the very beginning, whenever a Chinese company makes a national appearance, it was considered a success and some kind of national pride. But I think

as the process continues, it became more and more common. And I also realized a lot of the Chinese companies actually who have successful overseas business stopped wanting to get a lot of publicity among the Chinese general public because they want to look China. It's a bad look to be international. Yeah. But I think...

I think nowadays Chinese people are, I think it's kind of like a new stage. I want to take the example of a recent popular radio game called Hei Wu Kong and it's about the monkey key and I think it was a very well produced one. Of course there was some kind of a controversy but I think that was, if I try to find this kind of new trend of Chinese brand that Chinese people can feel proud of, I think that was probably a recent example.

not just for the quantity, but also for the quality that things they actually enjoy and think that they can actually be proud of. You've been listening to The State of China, a discussion recorded at our State of Asia conference last November here in Zurich.

More information on all the speakers, as well as videos and summaries for the entire conference, are available on our website. A link is in the show notes. We'll share several sessions here on the podcast as well, so be sure to subscribe. And sign up for our weekly newsletter to be the first to learn about the 2025 edition of State of Asia and the many other events and activities from Asia Society Switzerland. That link also in the show notes.

For now, I'm Rem Koutanis. Thanks very much for listening.